» How much is the levy?
» What is the HIH levy?
» How should a levy payment be made to the Building Commission?
» What happens if a building permit levy is not paid?
How much is the levy?
Where the cost of the building work is greater than $10,000, the Building Act 1993 applies:
- A building permit levy (to fund the building control system in Victoria) of 0.064 cents in every dollar of the cost of building work
- A building permit levy (to fund the dispute resolution service, Building Advice and Conciliation Victoria) of 0.064 cents in every dollar of the cost of building work
- An additional building permit levy (HIH levy) of 0.032 cents in every dollar of the cost of domestic building Please Note: As of 30 June 2010 HIH levy has been repealed but does apply in some circumstances. Click here for more detailed information
For example:
- For commercial building work, the levy applicable is 0.064 + 0.064, totalling 0.128 cents in every dollar of the cost of building work
- For domestic building work where HIH levy is applicable (see above), the levy applicable is 0.064 + 0.064 + 0.032, totaling 0.160 cents in every dollar of the cost of building work
- For domestic building work where HIH levy is not applicable (see above), the levy applicable is 0.064 + 0.064, totaling to 0.128 cents in every dollar of the cost of building work
The building permit levy is not payable if the cost of building work is $10,000 or less.
How do I work out the cost of the building work?
The cost of the building work is the contract price for the building work if there is a contract for the work. In any other case, the cost of building work is an estimate. It is the responsibility of the applicant for a building permit to declare the correct cost of building work. The cost of building work is determined on the date the application is made for the building permit.
In determining the cost of building work for the purposes of calculating the building permit levy, the amount of GST must be included in the cost of building materials and the cost of labour.
A building surveyor must refuse an application for a building permit when the contract price for the work is substantially lower than the price normally payable under contracts for work of that kind, or it contains statements about the cost of the building work that are false and misleading.
Providing incorrect information amounts is an offence under the Building Act 1993.
HIH Levy
What is the HIH Levy?
The Victorian Government passed the House Contracts Guarantee (HIH) Act 2001 to introduce an additional levy on building permits to assist those who were affected by the collapse of HIH. This levy added an additional 0.032 cents in every dollar of the cost of domestic building work over $10,000 for which a building permit is sought. The levy was applicable from 8 June 2001.
The HIH levy partly covered the cost of claims from home owners who were insured by HIH for domestic builders insurance. Claims were managed by the Housing Guarantee Fund (HGF).
Repeal of the HIH Levy
In 2001 the House Contracts Guarantee (HIH) Act 2001 (HIH Act) provided for the collection of the HIH levy. The HIH Act also contained a provision to repeal the provision collection of the HIH levy on 30 June 2010 (if not earlier).
Questions and answers for building surveyors
From what date is the HIH building permit levy no longer payable?
As of 30 June 2010 (i.e. on that date and thereafter) the HIH levy cannot be imposed because section 201(1A) of the Building Act 1993 (which currently imposes the HIH levy) is repealed on 30 June 2010.
Under what circumstances is the HIH levy required to be paid after 30 June 2010?
The HIH levy will still be required to be paid on or after 30 June 2010 by an applicant where the HIH levy was lawfully imposed and the applicant became obliged to pay the HIH levy prior to 30 June 2010. A relevant building surveyor (RBS) receiving the HIH levy in this scenario will be required to collect and account for the HIH levy in accordance with the Building Act and Building Regulations.
Section 201(5) of the Building Act requires the RBS to estimate the cost of the building work for which the application is sought and, without delay, to give written notice of the estimate and the amount of levy payable to the applicant. Section 201(6)(a) requires the RBS to refuse an application for a building permit if the levy is not paid at the end of 90 days after the building surveyor gives the applicant written notice of the estimated cost of the building work.
Any notice given by an RBS in accordance with section 201(5) on 30 June 2010 or after 30 June 2010 cannot include any HIH levy component.
What are the building permit levy return reporting requirements from 30 June 2010?
Where HIH levy is payable:
- There are no changes proposed where the HIH levy is payable.
- The RBS must provide the amount of the cost of domestic building work in the levy return. (For electronic returns, it is column BP).
- The RBS must also provide the HIH levy amount in the levy return. (For electronic returns, this is column BQ).
- As has been the case since the inception of the HIH levy, the RBS must include the HIH levy amount in the total levy payable. (For electronic returns, this is column BR).
Where the HIH levy is not payable:
- The RBS must report the cost of domestic building work as "0". (For electronic returns, it is column BP).
- The RBS must also report the HIH levy amount in the levy return as "0". (For electronic returns, this is column BQ. Do not use text comments for example "not payable").
- Please ensure that no amount of HIH levy is included in the amount of total levy payable. (For electronic returns, this is column BR).
It is proposed for the foreseeable future to retain the reporting format for electronic and manual reporting returns. This will facilitate the reporting of the HIH levy where the RBS determines the levy to be payable.
Should you have any enquiries please call the Levy Department at the Building Commission on 1300 815 127
Payment of building permit levy
Building surveyors are required to pay to the Commission all amounts of building permit levy received for building permits issued during a given month.
- Cheques are to be made payable to the Building Administration Fund. Please note payment of the levy by third party cheque raises a number of legal issues. For further information see Practice Note 2005-50 Building Permit Levy - payment by third party cheque, available for all registered building practitioners in the members section.
- A direct credit facility (electronic funds transfer) is available for building surveyors to pay the levy monthly. Building surveyors are required to contact the Commission to obtain an organisation identification code to enable these transactions to be processed. A payment advice form must also be completed before using this payment method. For further information contact the Levy Section on 1300 815 127 or email levyenquiry@buildingcommission.com.au
What happens if a building permit levy is not paid?
A building surveyor must refuse an application for a building permit if the building permit levy is not paid.
